MetLife 2013 Annual Report Download - page 117

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
4. Insurance (continued)
Future policy benefits are measured as follows:
Product Type: Measurement Assumptions:
Participating life Aggregate of (i) net level premium reserves for death and endowment policy benefits (calculated based upon the
non-forfeiture interest rate, ranging from 3% to 7% for domestic business and 1% to 13% for international business,
and mortality rates guaranteed in calculating the cash surrender values described in such contracts); and (ii) the
liability for terminal dividends for domestic business.
Nonparticipating life Aggregate of the present value of expected future benefit payments and related expenses less the present value
of expected future net premiums. Assumptions as to mortality and persistency are based upon the Company’s
experience when the basis of the liability is established. Interest rate assumptions for the aggregate future policy
benefit liabilities range from 2% to 10% for domestic business and 1% to 13% for international business.
Individual and group
traditional fixed annuities after
annuitization
Present value of expected future payments. Interest rate assumptions used in establishing such liabilities range
from 1% to 11% for domestic business and 1% to 12% for international business.
Non-medical health
insurance
The net level premium method and assumptions as to future morbidity, withdrawals and interest, which provide a
margin for adverse deviation. Interest rate assumptions used in establishing such liabilities range from 4% to 7%
(primarily related to domestic business).
Disabled lives Present value of benefits method and experience assumptions as to claim terminations, expenses and interest.
Interest rate assumptions used in establishing such liabilities range from 2% to 8% for domestic business and 1%
to 9% for international business.
Property and casualty
insurance
The amount estimated for claims that have been reported but not settled and claims incurred but not reported are
based upon the Company’s historical experience and other actuarial assumptions that consider the effects of
current developments, anticipated trends and risk management programs, reduced for anticipated salvage and
subrogation.
Participating business represented 5% and 6% of the Company’s life insurance in-force at December 31, 2013 and 2012, respectively. Participating
policies represented 19%, 20% and 21% of gross life insurance premiums for the years ended December 31, 2013, 2012 and 2011, respectively.
PABs are equal to: (i) policy account values, which consist of an accumulation of gross premium payments and investment performance; (ii) credited
interest, ranging from 1% to 13% for domestic business and 1% to 12% for international business, less expenses, mortality charges and withdrawals;
and (iii) fair value adjustments relating to business combinations.
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